In Stock Market Investors and Traders are defined differently although most of the people remain confused and use these terms interchangeably. People involved in Intraday Trading are referred as traders or day traders and those who put their money in stock market for longer period of time to earn profit later by selling the shares are called investors.
Trading in stock market is not less then a bettle if you are going to trade in market you can not afford to go without permission. One has to see the fundamentals of the company in which they are planning to trade, intraday trading involves greater risk and the intraday trader has to follow the best stock tips to see the technical view of the company. The intraday traders should be fast and quick while taking decisions during online trading sessions, as markets are very volatile and changes levels quickly.
So it is improtant to know the advantages and disadvantages of intraday trading
Advantages:
1. No worry about news that come at night
2. More efficient profit management
3. An enforced exit eliminates losses
4. Working with high price fluctuations
5. Positive emotions drive positive attitude
6. Trading in liquid markets
Disadvantages:
1. Intraday fluctuations may be essential raising the degree of risk
2. Constant attention is needed
3. Neglecting the long-term trend
4. Need in constantly updated quote flow
5. P&L are restricted
6. Intraday strategy requires active trading which raise costs
7. Only well-disciplined trader may succeed.
Rules of intra-day trading
Invest what you can afford to lose
Intra-day trading carries more risk than investing in stocks. Invest only the amount that you can afford to lose. An unexpected movement can wipe out your entire investment in a few minutes. In January 2009, the Satyam Computer scrip fell more than 80% from Rs 188 to Rs 31 in one day. If it is a leveraged position, you could lose more than you invested.
Choose highly liquid shares
Day traders must square their positions at the end of the trading session. This is easy if you are trading in large-cap, index-based stocks, which are very liquid and get traded in large volumes every day.
Research watch list thoroughly
You should know about all forthcoming corporate actions (stock splits, bonuses, dividends, result dates, mergers, etc) as well as technical levels of the stock.
Fix entry price and target levels
Before you buy, fix your entry price and target level and stick to your decision do no change it over the little movement to the market. Just stick to your levels
Use stop losses to contain impact
A stop loss is a trigger for selling shares if the price moves beyond a specified limit. It helps the buyer limit his losses in case the share belies his expectations and moves down (or up). Suppose you buy 20 shares of Reliance at Rs 940 each and set a stop loss of Rs 920. If the share falls to Rs 920, your shares will be sold. In this manner, your losses will be curtailed even if the share drops to Rs 900. A stop loss takes the emotions out of the decision to sell.
Trading in stock market is not less then a bettle if you are going to trade in market you can not afford to go without permission. One has to see the fundamentals of the company in which they are planning to trade, intraday trading involves greater risk and the intraday trader has to follow the best stock tips to see the technical view of the company. The intraday traders should be fast and quick while taking decisions during online trading sessions, as markets are very volatile and changes levels quickly.
So it is improtant to know the advantages and disadvantages of intraday trading
Advantages:
1. No worry about news that come at night
2. More efficient profit management
3. An enforced exit eliminates losses
4. Working with high price fluctuations
5. Positive emotions drive positive attitude
6. Trading in liquid markets
Disadvantages:
1. Intraday fluctuations may be essential raising the degree of risk
2. Constant attention is needed
3. Neglecting the long-term trend
4. Need in constantly updated quote flow
5. P&L are restricted
6. Intraday strategy requires active trading which raise costs
7. Only well-disciplined trader may succeed.
Rules of intra-day trading
Invest what you can afford to lose
Intra-day trading carries more risk than investing in stocks. Invest only the amount that you can afford to lose. An unexpected movement can wipe out your entire investment in a few minutes. In January 2009, the Satyam Computer scrip fell more than 80% from Rs 188 to Rs 31 in one day. If it is a leveraged position, you could lose more than you invested.
Choose highly liquid shares
Day traders must square their positions at the end of the trading session. This is easy if you are trading in large-cap, index-based stocks, which are very liquid and get traded in large volumes every day.
Research watch list thoroughly
You should know about all forthcoming corporate actions (stock splits, bonuses, dividends, result dates, mergers, etc) as well as technical levels of the stock.
Fix entry price and target levels
Before you buy, fix your entry price and target level and stick to your decision do no change it over the little movement to the market. Just stick to your levels
Use stop losses to contain impact
A stop loss is a trigger for selling shares if the price moves beyond a specified limit. It helps the buyer limit his losses in case the share belies his expectations and moves down (or up). Suppose you buy 20 shares of Reliance at Rs 940 each and set a stop loss of Rs 920. If the share falls to Rs 920, your shares will be sold. In this manner, your losses will be curtailed even if the share drops to Rs 900. A stop loss takes the emotions out of the decision to sell.
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